The report, which cites unnamed sources "familiar with the situation," said Apple cut orders for iPhone 5 screens to about half of what the company previously planned. Apple also cut orders for other iPhone 5 components, according to the report.

Apple, which has been a dominant player in the smartphone market since the original iPhone was introduced in 2007, has been losing ground in recent months to Samsung Electronics Co. Ltd. and other vendors offering phones based on Google Inc.'s Android operating system. Android handsets are typically less expensive and by some measures more appealing than iPhones.

The September introduction of the iPhone 5, the sixth generation of the iPhone family, disappointed many observers. The handset offers only incremental improvements over its predecessor, lacking the revolutionary improvements that many have come to expect of an Apple product introduction.

Apple's stock declined by more than 3 percent Monday after the Journal report came out. The company's stock closed at $501.75. In after hours trading, Apple's stock rebounded to more than $503. Related stories:

The lower than expected demand may reflect the market look for different screen size. I can see the overall form factor of iPhone5 makes it convenience to keep it in a pocket or a purse. It can be kept in the front pocket of a shirt or in a small purse. However, the market responds to Samsung better reflecting screen size matters more. The abundance of content and the demand of all-in-one device may be the primary reason to the demand of big screen.
Features from Android might be one of many factors too. What features are you using on Android that are not available on iPhone?

I think you are correct @chanj. I often wondered if Apple would be forced to offer more models (such as more than one screen size) to stay competitive at some point. Since the iphone is a fairly large portion of their total sales Apple will need to fix this problem sooner rather than later. Just like they needed an ipad mini, they need an iphone "maxi".

Apple is well known as a leader in technology. iPad mini has kinda deviated from what their leadership pride IMO. A bigger screen of iPhone may push Apple further towards a territory that Jobs might not be willing to enter. Nonetheless, market drives. According to rumors, Apple might very likely go along with the market than keep their pride too high. The question is what is the next WOW product that Apple introduces to the market.
The tablet/ smartphone market is seriously congested. Samsung's products cover from 10" to 4". If you want something bigger than 4.8", you have option to go for 5.5". I guess the only option is smaller phone with a big screen. ;)

Apple needs to listen to consumers' demands more and provide products with features that are better than the competitors. The competitors have caught up with Apple and they are even providing better functionalities than Apple. Apple can no longer go about doing things the way they used to and expect the consumers will buy their products no matter what.

Apple has long kept their computers "private" despite perpetual complaints. Remember the Apple manager with the license plate "OpenMac" ? They eventually started down that path and I believe that they believe that the only thing that they accomplished was to lose market share to Apple clone makers (Motorola was one, don't remember others). I believe that manager left Apple a long time ago. Adding removable batteries, SD cards, etc. is just not what Apple does. They may take a hit from some consumers but that his offset by the Apple fanboy's commitment to buying Apple accessories.

Apple still doesn't let you send an SMS to a group defined in your contacts. Yes you can enter 20 recipients of an SMS, but if you want to send an SMS to the same 20 recipients tomorrow, you have to manually re-enter those recipients. They have never supported this and yet all their competitors HAVE for as long as I can remember. They only want to do things their way. That is why they have left the market so wide open for competitors.

Folks...it is pretty simple, APPL days in making Chips or even Mobile Hardware is numbered. The pudding in the software, Apps, Music, Gadgets, etc.. all the stuff they sell with Hardware.
Making SoCs, Tablets, Phones is not their core competency. At the end of the day, the CFO has to do checks and balances and will start to questions all the sunk cost they have in Hardware and SoC R&D part of the business. That would not need a genius to figure out that they are loosing their shirt on Hardware, and there is very little secret sauce or differentiation they are getting out of it....and the answer to that...is my first sentence again!